Distinction offers multi-manager absolute return bond fund

The £29m Dublin-domiciled fund has been relaunched as the Distinction Cautious Absolute Return Fixed Income fund.

Management of the fund is being taken over by Armstrong Investment Management’s multi-manager duo Ana Armstrong (pictured) and her husband Patrick.

It was previoualy managed by Investec’s John Stopford since it launched in April 2006, but it has underperformed its peer group over the period.

In the past five years it gained 6.5 per cent, compared to a 23.7 per cent return on average from funds in the FE offshore Fixed Interest - Global sector.

James de Bunsen will assist in selecting underlying fund managers on the revamped fund.

The group said that the initial portfolio includes Mr Stopford’s £339m Strategic Bond fund as an underlying manager. M&G Investments’ £5.7bn Optimal Income fund Richard Woolnough has also made the cut as has Franklin Templeton’s $4bn Asian Bond fund, run by Dong II Kim, Michael Hasenstab and Vivek Ahuja. The recently-launched BlackRock Absolute Return Bond fund run by Ian Winship has also made the cut.

Ms Armstrong said the fund would target absolute returns of 2 per cent more than the return available from cash, on an annual basis.

The fund will buy low-cost, passive funds as well as actively-managed products, she said. “The mandate is very flexible and does not force an allocation to any particular sub-set of the fixed income universe,” she said.

Ms Armstrong said the fund’s ability to minimise its net exposure to the market would stand it in good stead to navigate the potentially inflationary effects of monetary policy.

“As the market comes to the realisation that inflation is the consequence of the actions of central banks, many safe havens will fail and put cautious investors at risk of significant real and nominal losses,” she said. “Delivering consistent positive returns will become much more important than just preserving wealth.

“We believe our flexible fixed income mandate, which is not structurally long of assets that will be hurt by higher interest rates, is a sensible approach in this type of environment.”